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Armchair opinion: They should sell the properties to make up if they're having a deficit. Not predicting how this market situation would play out sounds like mi

Armchair opinion: They should sell the properties to make up if they're having a deficit. Not predicting how this market situation would play out sounds like mismanagement.

dylan604 4y ago
who is buying these properties at this moment?
- sam_lowry_ 4y ago
  I know, the discussion is US-centric, but last year Europe saw lots of binge buying of corporate office spaces by the local governments in view of conversion into refugee centers.
  - biggoodwolf 4y ago
    Who's gonna pay the real estate taxes? LOL
    - InitialLastName 4y ago
      I don't know if you're asking to be tongue-in-cheek, but this is a salient question. Normally, government buildings ("Held for public use") don't pay property taxes. This can be a serious issue in municipalities where large portions of the non-residential real estate is held by a higher-level governmental entity, such as Jackson, Mississippi, where the state government makes up a large bulk of the functional real estate, and thus does not contribute to the municipal tax base (while still making substantial infrastructural demands). [0] NY state example: https://www.osc.state.ny.us/files/local-government/publications/pdf/propertytax_exemptions.pdf https://www.osc.state.ny.us/files/local-government/publicati...
    - escapecharacter 4y ago
      Unhoused homeless people actually have a non-zero cost to the cities they’re in, whether it comes to incarceration or other costs. Cities could convert these office spaces into homeless shelters and save money.
      - ralph84 4y ago
        The reason you rarely see offices turned into housing is they don’t have enough plumbing or windows to be residences. It’s almost always cheaper to tear the buildings down and start over than try to retrofit.
        codeLettuce 4y ago
        I hadn’t heard this before. Do you have a source for this?
        Clubber 4y ago
        The first thing that comes to mind is most office buildings don't have showers, so that's probably the biggest one.
        dylan604 4y ago
        Sounds like not a real thing and someone trying to make a point on the interwebs. I've lived in buildings that were converted from commercial to residential of various forms as well as having a parent that was in construction doing this very thing. Yes, by default commercial buildings have centralized plumbing for common facilities. That is easily remedied with a few holes added into the concrete, and new plumbing run. Enough windows? WhatTheHuh? Commercial => Residential building conversions do often end up with some "unique" floor plans sometimes referred to as "shotgun" layouts due to their long and narrow designs. This ensures each unit has some windows (most often you can't open them as the original design didn't open). Interior spaces get converted into other common area/use spaces without window access.
        autoexec 4y ago
        > This ensures each unit has some windows (most often you can't open them as the original design didn't open). Could this be a problem for fire codes? Having multiple ways out of a bedroom for example. I've been in commercial buildings that seem like total death traps in a fire. Even if you get manage to break a window you'd have little chance of surviving the jump, and any kind of ladder long enough to reach the ground would be impractical.
    - rr808 4y ago
      Most countries dont have high property taxes like USA has in many states.
kmeisthax 4y ago
Yes, and that's what you'd expect in an Econ 101, "land is just like any other commodity" situation. The problems with this are several: - The value of a commercial building is a function of rentable value times expected ownership period. If you own a machine that prints $40k/mo for 10 years, then it's value is $4.8m. - Most landlords do not buy the land outright but instead buy everything with mortgages. This is true for both commercial and residential real estate. And everyone is leveraged to the hilt. - The reduction in commercial office rentals has caused a reduction in the actual value of the real estate in question[0]. Since landlords are leveraged, they can't sell without going underwater. The entire real estate market has an interest in keeping land prices high - it's a sort of class collusion. So there's a lot of systems in place to deny the inevitable, kick the can down the road, and so on. For example, banks will actually agree to repayment pauses when a building is between tenants, because it beats having a landlord liquidate a bunch of underwater properties and actually realize losses on something that is literally government-engineered to stay expensive. [0] There's an interesting wrinkle to this in that normally you actually wouldn't be allowed to do this. When you buy a building to rent it you also agree to a price floor set by the bank. If you rent for less your mortgage explodes - as in, you immediately have to recollateralize (pay back) the building value that you destroyed by undervaluing your rent.
- calvinmorrison 4y ago
  won't somebody think of the landlords!!!

Armchair opinion: They should sell the properties to make up if they're having a deficit. Not predicting how this market situation would play out sounds like mismanagement.

dylan604 4y ago

who is buying these properties at this moment?

sam_lowry_ 4y ago
I know, the discussion is US-centric, but last year Europe saw lots of binge buying of corporate office spaces by the local governments in view of conversion into refugee centers.
- biggoodwolf 4y ago
  Who's gonna pay the real estate taxes? LOL
  - InitialLastName 4y ago
    I don't know if you're asking to be tongue-in-cheek, but this is a salient question. Normally, government buildings ("Held for public use") don't pay property taxes. This can be a serious issue in municipalities where large portions of the non-residential real estate is held by a higher-level governmental entity, such as Jackson, Mississippi, where the state government makes up a large bulk of the functional real estate, and thus does not contribute to the municipal tax base (while still making substantial infrastructural demands). [0] NY state example: https://www.osc.state.ny.us/files/local-government/publications/pdf/propertytax_exemptions.pdf https://www.osc.state.ny.us/files/local-government/publicati...
  - escapecharacter 4y ago
    Unhoused homeless people actually have a non-zero cost to the cities they’re in, whether it comes to incarceration or other costs. Cities could convert these office spaces into homeless shelters and save money.
    - ralph84 4y ago
      The reason you rarely see offices turned into housing is they don’t have enough plumbing or windows to be residences. It’s almost always cheaper to tear the buildings down and start over than try to retrofit.
      - codeLettuce 4y ago
        I hadn’t heard this before. Do you have a source for this?
        Clubber 4y ago
        The first thing that comes to mind is most office buildings don't have showers, so that's probably the biggest one.
        dylan604 4y ago
        Sounds like not a real thing and someone trying to make a point on the interwebs. I've lived in buildings that were converted from commercial to residential of various forms as well as having a parent that was in construction doing this very thing. Yes, by default commercial buildings have centralized plumbing for common facilities. That is easily remedied with a few holes added into the concrete, and new plumbing run. Enough windows? WhatTheHuh? Commercial => Residential building conversions do often end up with some "unique" floor plans sometimes referred to as "shotgun" layouts due to their long and narrow designs. This ensures each unit has some windows (most often you can't open them as the original design didn't open). Interior spaces get converted into other common area/use spaces without window access.
        autoexec 4y ago
        > This ensures each unit has some windows (most often you can't open them as the original design didn't open). Could this be a problem for fire codes? Having multiple ways out of a bedroom for example. I've been in commercial buildings that seem like total death traps in a fire. Even if you get manage to break a window you'd have little chance of surviving the jump, and any kind of ladder long enough to reach the ground would be impractical.
  - rr808 4y ago
    Most countries dont have high property taxes like USA has in many states.

kmeisthax 4y ago

Yes, and that's what you'd expect in an Econ 101, "land is just like any other commodity" situation. The problems with this are several: - The value of a commercial building is a function of rentable value times expected ownership period. If you own a machine that prints $40k/mo for 10 years, then it's value is $4.8m. - Most landlords do not buy the land outright but instead buy everything with mortgages. This is true for both commercial and residential real estate. And everyone is leveraged to the hilt. - The reduction in commercial office rentals has caused a reduction in the actual value of the real estate in question[0]. Since landlords are leveraged, they can't sell without going underwater. The entire real estate market has an interest in keeping land prices high - it's a sort of class collusion. So there's a lot of systems in place to deny the inevitable, kick the can down the road, and so on. For example, banks will actually agree to repayment pauses when a building is between tenants, because it beats having a landlord liquidate a bunch of underwater properties and actually realize losses on something that is literally government-engineered to stay expensive. [0] There's an interesting wrinkle to this in that normally you actually wouldn't be allowed to do this. When you buy a building to rent it you also agree to a price floor set by the bank. If you rent for less your mortgage explodes - as in, you immediately have to recollateralize (pay back) the building value that you destroyed by undervaluing your rent.

calvinmorrison 4y ago
won't somebody think of the landlords!!!